The People's Movement for a Just Society (Pmove) called off its rally at Government House on Saturday but said it would still wait for the government to solve the problems of the poor.
Pmove said its members had made the difficult decision to take "two steps back", and to open the route for the Royal Ploughing Ceremony that will take place on Sunday and Monday so that Ratchadamnoen Road would be clear. Members would move to peacefully continue their protest at the side of the Education Ministry, it said.
The activist group, formerly known as the Assembly of the Poor, said it also wanted to show a spirit of cooperation to solve problems as progress was expected on several topics over the next week.
Pmove represents slum dwellers, farmers, people with land-rights problems from the Northeast, and residents affected by the Pak Moon Dam project in Ubon Ratchathani province.
The group said its first step back was to allow Deputy Prime Minister Chalerm Yubamrung, instead of Prime Minister Yingluck Shinawatra, to negotiate with members on the government's behalf.
The second step was to accept that only one issue, out of the group's four main demands, would be considered by the cabinet on Tuesday.
The three other issues left on the cabinet's agenda are the Pak Moon Dam, which local people have been campaigning against for 20 years; delays in issuing community land title deeds; and the Interior Ministry's proposal to built Baan Munkong low-cost housing estates.
Pmove said its current rally was the eighth staged to urge the Yingluck government to solve long-standing problems, so it was time for the government to speed up taking action.